Do Market Leaders Lead in Business Process Innovation? The Case(s) of E-Business Adoption
University of Toronto - Strategic Management
June 1, 2014
Management Science, 61(6) June 2015, 1197-1216. Lead article
Harvard Business School Technology & Operations Mgt. Unit Working Paper No. 10-104
US Census Bureau Center for Economic Studies Paper No. CES-WP- CES-WP-11-10
Are market leaders more likely to be early adopters of business process innovations? Although they tend to enjoy economies of scale in adoption, leaders may find that adjustment costs also increase with scale. Prior work has focused on how misalignment of incumbents’ internal capabilities may affect their technology strategy. However, technology-capability misalignment may exist outside the firm boundary, as well. In this paper, I build on mainstream product innovation concepts to predict when market leaders will adopt certain business process innovations. I then test these predictions in a large data set on early e-business adoption, leveraging its novel insight into focal firms, their markets, and their customers. I find market leaders were significantly more likely to embrace new IT-enabled practices – except when customer adjustment costs were a significant concern. These findings highlight the strategic significance of external capabilities in the face of technological change.
Number of Pages in PDF File: 36
Keywords: e-commerce, e-business, innovation, technological change, market leadership
JEL Classification: O3, M2, L2, L6
Date posted: June 1, 2010 ; Last revised: July 8, 2015
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